BRAND HEALTH CHECK: Holmes Place - How can Holmes Place add value over rivals?

Once the clear market leader, the health club chain has been badly hit by the growth of high-end rivals during a slump in the fitness industry. How can it recover?

Holmes Place was once the shining light of the high-growth upmarket fitness industry. The runaway market leader, it was pulling in exercisers in their thousands to gyms across the country.

From the chain's modest beginnings in 1980, when it opened its first outlet in Chelsea, Holmes Place reached a peak of more than 60 private health clubs. But it has started to lose market share and its place as the number one gym destination.

Critics of the brand say it has been slow to innovate and react to changing market conditions, which have seen a clutch of rivals emerge, including Fitness First and Virgin Active.

In 2001, Holmes Place had 230,000 members across more than 60 health clubs. According to the latest research from Mintel, it now has 177,000 members in 55.

Analysts have blamed this partly on an overall slump in the fitness industry.

The near-recession of the past two years has seen gym memberships fall, with irregular attendees questioning the wisdom of large monthly direct debits.

Holmes Place has also had its own internal issues to contend with. It floated on the Stock Exchange in 1997 to raise cash for expansion, but has been troubled by management issues in recent years.

These came to a head this summer with a management buyout that valued the chain at £25m - it was worth more than £376m four years ago.

New chief executive Ian Burke, a veteran of the hotel business who headed Thistle Hotels, is pledging to put things on an even keel. The chain has also appointed brand consultancy Dave to work on its marketing and brand positioning.

But what is required from the new management team if Holmes Place is to regain its position as the upmarket gym brand of choice in the UK?

We asked Holmes Place member Andy Annett, managing partner of promotional marketing agency Liquid Communications, and fitness fanatic Jonathan Mildenhall, joint managing director of TBWA\London.


Leading health and fitness clubs

Members Clubs

Whitbread 362,000 103

Fitness First 338,000 150

Esporta 238,000 57

Cannons Group 180,000 56

Holmes Place 177,000 55

Source: Mintel; figures for February 1 2003



I remember the first Holmes Place - a sexy and fashionable gym on the Fulham Road, almost completely populated by models; it was a great gym to hang out around. But I am now a member of another Holmes Place gym, and it is a very different animal.

It's positioned at the top end of the market, but the market is so blandly premium that there is little differentiation, if any at all, between the main brands. There's a spa here, a children's pool there, but on the whole there is little discernible difference between the main brands in what is almost a commoditised market. This makes it difficult to offer a mass top-end product at a premium price. The key challenge is to create differentiation in product and brand, and ensure this is strong enough to encourage loyalty and new customers.

My choice of gym was made by geographic and convenience factors - it's only three minutes from my house. I like the fact that Holmes Place spends a lot of money on it, I like the fact that it is mostly empty and I like the fact that I don't need to buy into any of the extra services that it offers. It is good for me, but is it good business for Holmes Place?


Holmes Place is a classic case of innovative marketing visionaries who set out to disrupt a market by offering a unique lifestyle experience at a great value price point.

As with so many brands established by visionaries, it seemed content to stand by and watch the market catch up - and, in some places, take over. Holmes Place, once a super-cool urban brand, now feels bland, empty and soulless. Gone is its mission to make Britain a healthier, more funky, more sociable place. Gone is any aspect of market-leading differentiation.

What the business needs to do is become disruptive again. The management team needs to interrogate the four Cs (corporate, consumer, competitive and communications) and identify the conventions it helped to establish.

Then it must work out once more which conventions should be disrupted.

A rigorous approach to hunting and challenging conventions could unlock a much-needed contemporary vision. This in turn would enable the company to identify a tighter marketing strategy, one that would make the Holmes Place name take on greater relevance to today's consumers.


- Differentiate Holmes Place as a brand from its competitors. Make sure the difference is communicated effectively.

- Segment existing and potential customers and ensure it's offering the right products, communications and promotions to each.

- Create genuine loyalty benefits for existing customers.

- Develop aggressive member-get-member schemes.

- Segment the customer base. Customers should be made to feel very special.

- Enhance the in-gym experience. DJs, in-gym promotions, social introductions, pre- or post-classes, are the norm now in 'super gyms'.

- Use online in a big way: communicate and motivate customers while they work.

- Reward loyalty. Use rewards such as free sunbeds.


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